China Mengniu was confident that its profit margin in the
second half would be in line with the first half, Chief
Financial Officer Wu Jingshui told reporters.

Gross profit margin for the period was 26 percent, almost
unchanged from 26.2 percent a year earlier, despite higher
prices for raw milk and other raw materials, while net profit
margin remained unchanged at 4.3 percent, the company said.

"We are confident we can at least maintain (first-half)
margin levels in the second half," Wu said, adding that the
company might raise product prices and adjust its product mix to
offset an estimated 3-5 percent rise in raw milk costs in 2011.

Market expansion and stricter government safety controls had
"created a healthy environment to nurture the future development
of the dairy industry in China", Chief Executive Yang Wenjun
said in a statement.

Mengniu would continue to develop small to mid-size ranches
to boost the proportion of raw milk from ranches and "ensure
product quality", Yang said.
Continued...